Abstract

Abstract This abstract relates to the following paper: Hue, B., Jinks, A., Spain, J., Bora, M. and Siew, S. (2019) Investment risk for long-term investors: risk measurement approaches: considerations for pension funds and insurers. British Actuarial Journal, 24, e16, doi: 10.1017/S1357321719000102.

Highlights

  • [Institute and Faculty of Actuaries, Sessional Research Event, London, 18 March 2019]. This abstract relates to the following paper: Hue, B., Jinks, A., Spain, J., Bora, M. and Siew, S. (2019) Investment risk for long-term investors: risk measurement approaches: considerations for pension funds and insurers

  • I am a member of the Institute and Faculty of Actuaries (IFoA) Council, the Risk Management Board, and I am Chief Risk Officer at Mobius Life

  • His whole career was spent in Defined Benefit (DB) pensions, previously advising a range of private sector trustees on sponsors and scheme funding in mergers and acquisitions

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Summary

Historical proportion of returns lower than CPI

Data Source: Multipl.com (S&P 500 Total Returns), US Bureau of Labor Statistics (CPI). Again, we can see that, as the term of the investment increases, the volatility of returns reduces significantly. We compare the average annual performance of S&P 500 to the US CPI. The annual average outperformance is represented by the light tan bars, and the dark. Risk of equity yielding worse than the 10 year Treasury is significantly high over the short term but dwindles over the long term with almost 5% p.a. higher returns

Historical proportion ofreturns lower than UST
Findings
Weak sponsor

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